Ch 6 – Standing out in an increasingly competitive senior living marketplace
How communities fall into the trap of matching competitor pricing, diminishing profit margins and the ability to deliver on their promises
I’m a big fan of One Wheels. What is that you ask? Click on the link and you will quickly be transported back to Marty McFly in the 1980s movie Back to the Future. My 13-year old son Noah got me into this hobby a year ago and I’ve been hooked ever since.
I was riding on Clearwater Beach last night with a group when my friend Nathan, all of 35 years old said, “Anyone been to The Villages in Ocala? That’s where I want to live!”
Seriously? Retirement living has gone so mainstream that a hip, 35-year old with a one-year old baby is already making plans to live there? Wow, “We’ve come a long way baby!”
He went on to say, “They play live music 365 days a year!” This created a visual image of him retiring in an environment of fun, where people came together to dance, talk, eat, drink and enjoy aging.
WHAT’S YOUR DIFFERENTIATING FACTOR?
In Chapter six, Hermann opens by talking about markets where sellers have true leeway in setting prices when there is something UNIQUE or INNOVATIVE about their product or service. What most stood out to me in this chapter is that we do a poor job as an industry distinguishing one operator from the other (consumer facing).
The result is that communities blend together, and buyers make decisions based on price. Communities fall into the trap of matching competitor pricing, diminishing profit margins and the ability to deliver on their promises.
The only way to exit these insane price wars is to differentiate. TRUE DIFFERENTIATION, not just “we are different” and only you can see what that difference is. The Villages is truly different and has a cult like status not just in FL but nationwide. Their decision to decide who they were and what experience they wanted residents to have has paid off in a big way.
THINK DIFFERENTLY: WHAT DRIVES PRICE?
To think out of the box it helps to look outside your everyday space. Most executives are too close to their own product or service to discover new ideas that can transform their business. To stimulate thought, we are going to look at something very basic, WATER.
It’s unreal what companies make selling an everyday resource we can get from our own faucets! First, if you had to pick one of three water bottles to drink right now, which would it be from the following options?
Let’s dig a little deeper now.
EVIAN: 1 L $2.65 A GEOLOGICAL MIRACLE?
Evian is much pricier than SmartWater or Aquafina.
Evian’s water is a geological miracle (they claim) because it passed through a few very scientifically unlikely permeable layers. Over the course of 15 years, rain and snow make their way into an underground spring where the water is harvested already full of electrolytes and minerals.
This assertation allows them to sell their water at a premium of 37% over competitor Aquafina and 17% over SmartWater. In France, Evian sells for three times the price of other waters!
How? Product DIFFERENTIATION and BRANDING.
SMARTWATER: 1 L $2.19 WATER PULLED FROM THE SKY?
SmartWater disrupted the status quo of bottled water by reimagining what water could be from the inside out. Their vapor-distilled water is pulled from the sky, then given electrolytes for taste.
Targeting young, active men and women with disposable incomes their water does more than hydrate.
The unique blend of electrolytes in SmartWater creates a taste that is distinctly fresh, crisp and pure unlike water pulled from the ground.
AQUAFINA: 1 L $.99 PUREST WATER AVAILABLE?
Aquafina touts their rigorous purification system, a seven-step HydRO-7 filtration process that takes out way more solids than other filtration methods, making for the purest water possible.
It takes out the stuff other bottled waters leave in. This brand earns 37% less than Evian, the price leader in this scenario.
THREE WATERS, THREE DISTINCT DIFFERENTIATING FACTORS
While you may not have known the difference between these three bottled waters, now that you do, has your choice of which you prefer to drink changed?
TAKE A MOMENT AND VOTE AGAIN! IS YOUR ANSWER THE SAME OR DIFFERENT NOW THAT YOU KNOW MORE ABOUT EACH BRAND?
WANT TO DIG IN DEEPER?
- Learn more about how Evian is marketed here
- Learn more about how SmartWater is marketed here
- Learn more about how Aquafina is marketed here
Imagine using this same exact process to formulate what differentiates your independent living, assisted living, memory care or active adult living community from its top competitors.
The process isn’t easy but it’s transforming. Here is a great opportunity to take action now: ask yourself the following questions:
- What is it that we do that our competitors can’t claim?
- What impact does that have on our residents?
- What is the value to our residents and their families?
- How can we clearly communicate that value to retain fee integrity?
- How can we use these differentiating factors to educate and drive referrals?
- How can we use these to increase price or if priced properly, volume?
CREATE A COMPARISON GRID
Water is a highly competitive space. Walk into any supermarket and you will see a wall of various brands, prices and offers. If not properly educated consumers will more often buy on price and just grab the best deal. Sound familiar?
Consider creating your own comparison grid or reach out to our team here at Bild & Co to do it for you. We will shop the competition, lay out the differentiating factors of each (if any) and work with you to identify how best to position your specific communities in each market. Our team will then put it into a nicely designed comparison chart as the top bottled water brands have done below. Simply email firstname.lastname@example.org with the subject line Comparison Grid and we will reach out to get the process started within 24 hours.
WHO KNEW WATER WAS SO COMPLEX AND THE PRICING SO VAST?
Just as it seems odd to consider something as simple as water can be so confusing to consumers, the same holds true for seniors housing to include the many options of independent living, assisted living, memory care, active adult, lifeplan, CCRC, home health, PACE and more.
There are an array of options, sizes and pricing structures with no clear indication of which will ultimately deliver the best results. Grab a notepad and start jotting down ideas on what makes you unique while this information is fresh in your mind.
Want to brainstorm or have questions? Shoot me an email at TBild@BildandCo.com.